Liability insurance
Produced in partnership with Julia Dias QC of 7KBW

The following Insurance & Reinsurance practice note produced in partnership with Julia Dias QC of 7KBW provides comprehensive and up to date legal information covering:

  • Liability insurance
  • What is liability insurance?
  • Liability insurance—general principles
  • Liability insurance—requirement for reasonable settlements
  • Liability insurance—joint and composite insurance
  • Liability insurance—requirement for legal liability
  • Liability insurance—insured’s liability must be within the scope of the policy
  • Liability insurance—claims against insurers by third parties

Liability insurance

This Practice Note outlines the characteristic features of liability insurance and different types of liability insurance available. It also examines the scope of cover under liability policies and provides guidance regarding ascertainment of liabilities and the reasonableness of loss settlements, together with guidance on common issues that arise in relation to liability insurance, including joint and composite insurance and the application of the Third Parties (Rights Against Insurers) Act 2010 (TP(RAI)A 2010).

The related documents pod on the right includes links to further guidance on specific aspects of liability insurance, including notification of claims and circumstances, defence of claims, and to guidance on particular forms of liability insurance.

What is liability insurance?

Liability insurance is a form of insurance which covers the insured against the risk of incurring liability to a third party. It is as much a form of indemnity insurance as property insurance. However, whereas under most forms of property insurance the insurer undertakes to pay the amount of the loss suffered by the insured as a result of the damage or destruction of the insured property, the insurer under a liability policy undertakes to indemnify the insured against the amount of the liability which it incurs to the third party. The insured’s loss is thus the incurring of the liability.

Liability may be incurred in many different ways to a variety of different third

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